San Francisco is covered in liens

Every month we look back at the most recorded documents in San Francisco and try to understand the current climate. Since April just closed, we’ll take a deep dive on this dataset.

In April, there were 99 different documents recorded 13,702 times. That’s a decrease of about 4,000 recordings from March, which depending on the data may mean different things.

The interesting part of this data is that that most popular document recorded in April was a Notice Lien, which is a notice to the property owner that they’re about to have a lien placed on their property.

Typically, this means someone isn’t paying their bills. In April, there were nearly 2,300 Notice Liens recorded, which was an increase of 64% from the previous month.

Now that wasn’t the only interesting development in April, but it does help explain the rest of the story.

There was about a 30% decrease in Deeds recorded and a 26% decrease in Deeds of Trust, which would mean that less properties are being purchased and mortgaged.

This would make sense given the increasing interest rate environment, which increases the cost of ownership and crimps demand.

But, lets take a deeper look to see if SF homeowners are truly facing financial distress. The best way to look at this is by checking to see if homeowners are paying their mortgages. If they don’t pay their mortgage, they could face foreclosure, so this is the very first bill financially strained homeowners pay. When problems happen, homeowners pay their mortgage as long as possible.

Surprisingly, there was a 10% increase in Notices of Default but a 27% decrease in Notices of Trustee Sale from March, so it doesn’t look like homeowners are so stressed that they’re defaulting on their mortgages just yet.

It will be interesting to see how this plays out. Is it a short term hiccup on a small dataset or the top of the property market that’s beginning a long slow decline? Only the data will tell.

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